Agfa said that the proceeds of the rights issue would be used to pay down the €338m drawn under its €690m revolving multi-currency credit facility, which expires in July 2012.

Agfa added that, after paying down the debt and thereby increasing the headroom in its credit facility, the undrawn amount would remain available to fund the group’s growth.

The company’s other sources of finance include a €200m fixed rate bond due to mature in 2015. In 2009, Agfa redeemed part of the bond (€5m).

The Belgium-based pre-media and digital equipment manufacturer has seen its net finance costs almost double from €63m in 2007 to €114m in 2009.

Agfa attributed this hike to a significant rise in pension costs in 2008 as a result of the financial crisis. However, it added that the proceeds of the capital increase “will not be used for the payment of pension obligations”.

According to the company’s half-year results, the funded status of its defined benefit pension scheme was in deficit to the tune of €1.1bn.

Meanwhile, Agfa confirmed its outlook for 2010, with full-year revenue expected to increase by around €200m versus 2009 as a result of growth in the Graphics division, following the acquisitions of Gandi Innovations and Harold M Pitman Company, and the recent creation of the Agfa Graphics Asia joint venture in China.

Existing Agfa shareholders will be entitled to one new share for every three shares they hold. The issue price of the new shares is €3.45 per share, representing a discount of 35% on the previous closing price of €5.32.

Read the original article at www.printweek.com.

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